A pre-qualification is the first step in uncovering what you can afford when embarking on the search for your next property.  It should outline a realistic budget, including the costs to complete the purchase, including legal fees and applicable taxes, as well as estimated ongoing mortgage payments.

To arrive at an accurate budget and to move quickly once you find your perfect property, you’ll need to submit comprehensive documentation describing your current income amongst other details in advance.

A pre-qualification gives you an understanding of the maximum amount you can comfortably spend on your new home.  Armed with this knowledge, you can confidently search for properties within your price range.

At times it may make sense to lock in a favorable interest rate for a specified period (typically 90-120 days) allowing you to explore the market without worrying about potential interest rate fluctuations.

Once you receive your pre-qualification terms, it’s important to maintain the same financial picture until your mortgage is finalized.  Significant changes, such as switching jobs, making large purchases, or opening new credit cards can impact your final mortgage approval.

If you’re ready to see what you might qualify for, please don’t hesitate to ask, I am always happy to see how I can help.

Adapted from DLC Marketing

Photo Credit: Sshootz on Unsplash

Property Taxes are typically due in July in BC, and the Home Owner Grant gives owners a break if eligible.

The eligible property value limit increased to $1.975 million in 2022.  Homeowners in Metro Vancouver, the Fraser Valley, and the Captial Regional Districts owning property valued at less than that amount may be eligible for a discount of up to $570 for the basic grant.  Homeowners aged 65 or older, individuals with disabilities, or those living with a relative who has a disability are eligible for a grant of up to $845.

In northern or rural areas (outside Metro Vancouver and the Fraser Valley and Capital Regional districts) homeowners can claim up to $770, and seniors or people with disabilities can claim up to $1,045 for their grant.

A grant reduction applies at $5 for every $1,000 over the threshold but low-income seniors, veterans, and people with disabilities can apply for a low-income grant supplement to replace the lost grant amount.

To apply for the grant, visit: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant/apply or call Phone: Call 1 800 663-7867.  Service BC is available to assist with more complex applications.

The best time to apply is before your taxes are due, optimally in May, once you have both your BC Assessment and municipal tax notice in hand, but you can apply at any point in the tax year.  You may be able to apply retroactively for up to one year if you missed a year as well.

Feel free to contact me with any questions you may have regarding your property and financing, I am always pleased to help.

Adapted from BC’s Home Owner Grant website https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant/apply

and

BC’s Article entitled “Home Owner Grant helps people with property taxes” found here: https://news.gov.bc.ca/releases/2022FIN0001-000004

With the increase in the Overnight Rate of .25%, the Prime Rate has also risen by this amount in Canada.  If you have a Variable Rate mortgage, please feel free to contact me for strategies to discuss the rate outlook, manage a lengthening amortization, or manage your payment.  Static payment variable mortgage holders may be contacted by their lenders to discuss bringing their amortization back in line with the amortization they had at the beginning of their current term.  There are steps borrowers may be able to take to prevent having to make a large lump sum payment or to make a large increase to their regular payment.

From Dr. Sherry Cooper:

If there were any doubt that the Bank of Canada wanted inflation to fall to 2%, it would be obliterated today. In a relatively surprising move, the Bank hiked the overnight policy rate by 25 bps to 4.75%, and an equivalent hike will follow in the prime rate. Fixed mortgage rates had already leaped higher even before today’s move as market-determined bond yields have risen in the wake of the US debt-ceiling debacle. Now variable mortgage rates will increase as well. The central bank is determined to eliminate the excess demand in the economy.

“Monetary policy was not sufficiently restrictive to bring supply and demand into balance and return inflation sustainably to the 2% target,” the bank said, citing an “accumulation of evidence” that includes stronger-than-expected first-quarter output growth, an uptick in inflation and a rebound in housing-market activity.

I had thought that the Bank would want to see the May employment data and the next read on inflation before they resumed tightening, but with the substantial May numbers in the housing market, the Governing Council jumped the gun.

The Reserve Bank of Australia did the same thing earlier this week. But their economy was already softening. On the other hand, the Canadian economy grew by a whopping 3.1% in the first quarter and is likely to surprise on the upside in Q2, boosted by a strong rebound in housing. If the correction in housing is over, then the Bank has failed to cool the most interest-sensitive sector in the economy. Governing Council fears that inflation could get stuck at levels meaningfully above the 2% target.

The next Bank of Canada decision date is a mere five weeks away. While we will see two labour force surveys and one inflation report, the odds favour another rate hike before yearend. The BoC concluded in their press release that, “Overall, excess demand in the economy looks to be more persistent than anticipated.”

No doubt, if the data remain strong over the next several weeks, another 25 bps rate hike is likely in July. Deputy Governor Beaudry will flesh out today’s decision in his Economic Progress Report tomorrow.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca